Corporate Transparency Act (CTA): Navigating Disclosure Requirements for Businesses

In the ongoing battle against financial crimes, the Corporate Transparency Act (CTA) has emerged as a pivotal piece of legislation. Enacted on January 1, 2021, its implementation is set to begin on January 1, 2024, and it is poised to impact businesses in the United States profoundly. Designed to thwart money laundering, tax evasion, and other illicit activities, the CTA mandates new disclosure requirements, ushering in greater transparency for corporate entities.

At Tiveron Law, PLLC, we understand the significance of the CTA and its implications for businesses. This blog post comprehensively overviews the CTA’s key provisions, reporting requirements, and business implications. 

Who’s Affected?

The CTA casts a wide net, encompassing around 32 million companies in its purview for 2024. It applies to domestic and foreign entities, including corporations, limited liability companies (LLCs), and similar structures. However, exceptions exist, with entities like securities issuers, banks, and insurance companies being exempt.

Unveiling Beneficial Owners

A central objective of the CTA is to unveil the identity of “beneficial owners” within these entities. Beneficial owners include individuals who hold substantial control over a company or own at least 25% of its equity interests. The CTA contains exemptions for minors, nominees, and specific employees.

The information to be disclosed includes:

• Full legal names
• Dates of birth
• Residential addresses
• Identification numbers
• Supporting documents for beneficial owners

Reporting companies must also provide their own legal and trade names, addresses, jurisdiction of formation, and taxpayer identification numbers.

Consequences of Non-Compliance

Compliance with the CTA is not optional; it’s mandatory for businesses. Failure to adhere to the reporting requirements can result in severe consequences, including hefty fines and potential criminal penalties. It’s important to note that these penalties can apply to both the reporting company and individuals responsible for non-compliance.

Deadlines and Compliance

The compliance deadlines under the CTA vary depending on a company’s registration date. Businesses formed before January 1, 2024, have until January 1, 2025, to ensure they meet the reporting requirements. Conversely, entities formed after January 1, 2024, must report their information within 30 days of formation.

Consult Legal Professionals

Given the stringent reporting requirements and potential consequences for non-compliance, it’s advisable for companies affected by the CTA to seek legal counsel. Legal professionals can provide valuable guidance on ensuring timely compliance and help navigate the complexities of the reporting process.

Please stay tuned for updates and further guidance on the CTA, as additional clarifications from FinCEN may provide further insights into its implementation. At Tiveron Law, PLLC, we are committed to assisting businesses in navigating these changes effectively and ensuring compliance with the law.